Amazon Cuts Tax Deal With California

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Amazon has tried fighting sales tax on its online purchases in California with millions of dollars, lobbyists, dropping California associates, a new law and even promising new call centers in the state exchange for deferring taxes until 2014.

Some of its efforts bore fruit Thursday when the state's legislature agreed to a year deferral of the online titan's sales tax as long as Amazon stopped its efforts to put an initiative on the state ballot, the Los Angeles Times reported. It could be just in time, because Congress is debating how sales tax should be handled by online retailers. Any federal law would supercede a state law, so if Congress acts by July 2012, Amazon's fate will be sealed with or without California's approval. The new law would have brought in about $200 million annually to the state.

Amazon had tried to defer the tax collection until 2014 by offering call centers to the state to sweeten the deal. It didn't work.

Gov. Jerry Brown said he wasn't behind any deferral of sales taxes. "I'm concerned about anything that would reduce revenues going forward because we're in a very uncertain economy," Brown said in the Times. "We need more revenues unless we're going to keep curbing schools, courts, corrections."

From questions about bribery, to its spending millions to create a ballot initiative, to its sacking of California sellers to avoid taxes hikes, this fight has brought out the ugly in Amazon. However, the reason the state gave Amazon a year deferral is obvious. In this economy, no one is going to vote for paying sales tax and if that law passed, it could easily gut any of the state's hopes for that lost $200 million in sales tax. Despite all borderline slimy tactics, Amazon still seems to hold the upper hand -- at least until Congress makes a decision.